BlackRock accelerates Credit platform’s expansion through a complementary acquisition that gives customers access to growth and venture debt financing methods.
A definitive deal between BlackRock Inc. and Kreos Capital (“Kreos”) was announced, according to which BlackRock will fully control Kreos, one of the top providers of growth and venture debt financing to businesses in the technology and healthcare sectors.
BlackRock’s position as a preeminent global credit asset manager is strengthened by the purchase of Kreos, furthering the company’s goals of offering customers a variety of private market investment products and solutions. With a seasoned investment team and a successful long-term track record, Kreos complements BlackRock’s Global Credit business, and the adjacent asset class exposes more private debt opportunities for BlackRock’s customers to access a wider range of the risk/return spectrum.
“Over the past 20 years, BlackRock has built leading private debt capabilities to help clients achieve a variety of investment goals by aligning proven investment excellence with long-term market opportunities,” said James Keenan, CIO and Global Head of BlackRock Private Credit. “The Kreos team has created an investment procedure of the highest caliber and delivered for clients through several cycles. We think that now is a good time to welcome the Kreos team to BlackRock since we anticipate that growth and venture lending will play a significant role in the future expansion of the global direct lending opportunity set.”
BlackRock’s Stephan Caron, Head of EMEA Private Debt, stated: “Investing in private debt has grown in importance as a part of investors’ portfolios. In 2023, more than half of respondents intend to grow their private credit holdings,” according to BlackRock’s most recent Global Private Market Survey. “Given current market conditions, private credit has become a desirable asset class as investors pay attention to its ability to generate income, low volatility, portfolio diversification, and low default rate compared to public markets. BlackRock now has the chance to offer investors throughout the world a wider range of the risk/return spectrum thanks to the acquisition of this top-notch staff with a strong track record over numerous market cycles.”
According to Mårten Vading, co-founder and general partner at Kreos Capital, “Kreos is now taking the next step by expanding the business and working with BlackRock. Kreos is a pioneer of private finance solutions for high growth technology and healthcare firms in Europe and Israel. With the help of the acquisition, we can use BlackRock’s size, resources, and technology to develop a comprehensive product lineup that caters to innovative businesses around the world.”
Kreos Capital’s co-founders and general partners, Raoul Stein and Ross Ahlgren, expressed their excitement about “BlackRock’s sustained support of private debt in general and growth lending in particular. BlackRock and Kreos working together will provide the growth ecosystem a variety of credit solutions. The fact that BlackRock purchased Kreos is evidence of the vitality and significance of the technology and innovation industries to the top asset manager in the world.”
Kreos Capital has invested more than €5.2 billion in more than 750 transactions in 19 countries since its founding in 1998. These investments have gone to more than 550 pan-European and Israeli high-growth firms in the technology and healthcare sectors. The company has made investments in a variety of IT subsectors, including finance, enterprise software, cybersecurity, semiconductors, digital marketing, and AI. In the healthcare industry, it has supported businesses in industries like drug and treatment development, medical equipment and technology, and healthcare.
London-based Kreos has a 45-person team that will join BlackRock as part of the transaction, and they have a 24-year track record of exceptional success. The Kreos investment team will join BlackRock’s European Private Debt platform, and the company’s present leadership will remain in charge of carrying out the firm’s tried-and-true investment strategy.
The deal is subject to the usual closing and regulatory requirements, and it is anticipated to close in Q3 2023. The deal has no appreciable financial impact on BlackRock’s earnings.
Kreos Capital received legal counsel from Goodwin Procter London and exclusive financial guidance from Moelis & Company. The law firm Skadden, Arps, Slate, Meagher & Flom advised BlackRock.